Shuaa swings to first-half profit on revenue boost

Dubai-listed investment bank says recurring revenue from all business segments supported net income during the period

Shuaa Capital says first-half revenue surged 68 per cent, year on year, to Dh99 million. Photo: Shuaa Capital

Shuaa Capital, a Dubai-based investment banking and asset management company, swung to a profit in the first half as revenue climbed on the robust performance of its asset management and investment banking businesses.

Net profit attributable to shareholders in the six months to the end of June rose to Dh20 million ($5.45 million), from a loss of Dh164 million in the same period in 2022, the company said on Thursday in a filing to the Dubai Financial Market, where its shares are traded.

Net operating income at the end of June rose tenfold to Dh32.4 million, up from Dh2.9 million from a year earlier.

Revenue for the reporting period surged 68 per cent, year on year, on a normalised basis, to Dh99 million, driven by recurring income from all business segments, as well as “performance fees recognised in the asset management segment”, Shuaa said.

“The first-half results underline Shuaa’s robust return to strong profitability, driven by our commitment to simplifying our balance sheet structure and reducing debt,” said its group chief executive Fawad Khan.

“Our existing portfolio and assets under management (AUM) reflect our strategy to diversify and boost our recurring fee income.”

The company’s asset management business, which encompasses investments funds and managed accounts across property, public and private markets, and debt, reported first-half revenue of Dh88 million in management and performance fees, an 11 per cent rise on an annual basis.

In July, Shuaa sold a plot of land in Business Bay to developer Danube Properties for Dh190 million.

The deal, arranged on behalf of its subsidiaries and other investors, was part of the company’s continued strategy to consolidate its asset portfolio, it said at the time.

“Our asset management strategy continuously seeks out new investment opportunities and creates investment products for our increasingly diversified investor base,” Mr Khan said.

Shuaa’s investment banking business, which includes corporate finance advisory, equity and debt capital market deals, merger and acquisition advice, as well as sales and trading, contributed Dh10 million to group revenue, a more than 25 per cent increase from a year earlier.

Higher growth in trading revenue offset lower advisory fees as no significant transactions were closed during the period by the investment bank, it said.

Shuaa, which has AUMs of $5 billion, has made efforts in recent quarters to diversify its product portfolio and increase its fee-income business.

In February, it announced the launch of two Sharia-compliant funds to further expand its portfolio of assets.

The funds, managed by Shuaa GMC, under the umbrella of Shuaa's Incorporated Cell Company (ICC) fund structure, will be domiciled within the Abu Dhabi Global Market.

One of the funds will focus on Saudi Arabia and the GCC, Shuaa Capital said at the time.

The other is a dedicated Sharia-compliant money market fund. The launch of both investment vehicles is expected to take Shuaa's assets managed by its product platform to more than $400 million.

In December, Shuaa also set up three Sharia-compliant funds within the ADGM, bringing AUMs on the company's Sharia-compliant platform to more than $200 million.

Shuaa said on Thursday that it had continued to deleverage its balance sheet during the first half of 2023, with the debt-to-equity ratio further improving to 88 per cent, from 123 per cent in the first half of 2022.

The company made debt repayments of Dh173 million since December 2022, highlighting the “continued commitment to deleverage and simplify its balance sheet and position for [the future] growth”, it said.